As part of efforts to control what one official called 'excessive competition', the mainland government has put up a new hurdle to domestic and foreign retailers hoping to expand in China. Under tighter measures, domestic and foreign retailers planning new outlets will be required to present their proposals at a hearing attended by competitors and government officials. In a directive issued by the State Economic and Trade Commission (SETC), the mainland authority is requiring local governments to draw up plans for the development of retail space in provinces or cities. 'For example, the local government should decide which part of an area will be used for retail use, and how many hectares of land will be used for shopping malls,' said a SETC official yesterday. The move comes two months after the SETC unveiled plans to regulate the fast-growing chain-store industry, in which domestic and foreign players such as China Resources Vanguard Department Store - controlled by red chip China Resources Enterprises - and Li Ka-shing's ParknShop have ratcheted up the competition. The retailer would be required to list reasons for opening an outlet and the local government would listen to the evidence before deciding whether a plan should be approved. The new requirement, especially the hearing system, was expected to slow retail operators' expansion plans in China, industry participants said. A spokesman at AS Watson, which controls ParknShop, said the company was examining the new requirements and declined to make further comment. China Resources was unavailable for comment yesterday. According to the directive, all provinces and cities are required to submit their master plans by December next year. The new directive would help them to formulate better land-use policies, avoiding over-expansion of retail space and unhealthy competition, the SETC official said. 'Local governments who fail to draw up the plans are not allowed to attract new foreign investment,' he said. Dong Xiaochun, board secretary of Hualian Supermarket, said the hearing system had already been implemented in Shanghai. Retailers planning to open outlets in Shanghai's prime shopping district were required to participate, he said. Mr Dong was confident of his firm's expansion plans, due to its large size. The mainland's second-largest supermarket chain, which operates 1,000 stores nationwide, last month said it was moving into the hypermarket business to fend off foreign rivals. URBAN PLANNING Local governments will be required to draw up a master plan outlining which areas will be used for retail space Retailers planning new stores will be required to present their plans before officials and competitors
